Home Retail primed to beat forecasts

14th Jan 2010 07:07

Home Retail thinks full-year profit will beat consensus estimates by £20m after a better than expected performance from the Argos business during the 18 weeks to 2 January.Catalogue shopping unit Argos, which operates through 744 high street stores, reported a 3.9% hike in total sales to £1.9bn and 0.1% increase in like for like sales.The disappearance of Woolworths helped boost toy sales, although good growth in televisions, personal computers and white goods was substantially offset by weakness in video gaming and jewellery.DIY chain Homebase posted a 4.6% rise in total sales to £501m and 4% jump on a like for like basis, led by big ticket items like kitchens.But these performances came at a price. Heavy discounting and currency movements caused a 250 basis point gross margin decline at Argos and 375 basis point drop at Homebase.'Argos has performed ahead of our plans in its most important trading period, and Homebase trading has continued to be strong,' said chief executive Terry Duddy. 'We now expect group benchmark profit before tax for this financial year to be about £20m ahead of the current market consensus of £265m.''Due to the uncertain economic outlook, we expect trading for the next financial year to remain challenging. We will plan accordingly from a position of continued operational and financial strength.'Figures for the remaining eight weeks of the current financial year (3 January 2010 to 27 February 2010) will be published on 11 March and its full-year results on 28 April.